Heat on Richmond over Waitotara bid

By Libby Middlebrook

The South Island's largest meat processor PPCS will test its influence over Richmond today when the North Island company puts a takeover proposal to shareholders.

Richmond will seek approval to buy Waitotara Meats, a Wanganui-based company with annual turnover of $100 million.

Richmond chief executive John Loughlin said the merger, which needs 50.1 per cent shareholder approval, would improve the company's annual profits by $5 million, adding at least 30c to the value of each share within 12 months. The shares last traded at $1.50.

But PPCS wants more control over Richmond and it does not favour the merger. The South Island company invested indirectly in Richmond in February by taking a 33 per cent stake in HKM Nominees, a Maori investment company which in turn had bought 33.4 per cent of Richmond from the Meat Board in 1997.

PPCS and HKM take a common stand on Richmond. If the merger goes through, HKM's holding would be diluted to about 25 per cent.

Last month PPCS sent a letter to Richmond shareholders, putting its case, as well as outlining its interest in buying more shares.

Yesterday PPCS chief executive Stewart Barnett told the Business Herald that the company was yet to decide which way it would vote over the Richmond/Waitotara merger.

"We've got an open mind. I don't have the total financial details yet," he said.

But Mr Loughlin said PPCS had received enough information about the merger.

"They've been given, as have all shareholders, an independent analysis from PricewaterhouseCoopers, which spells out in some detail the information which I believe people need to make a decision. That's always open to interpretation."

Richmond has also asked shareholders to vote on an increase in board members from nine to 11, which would put on the board Waitotara chairman Rod Pearce and Peter Spencer who has a 13 per cent stake in Richmond. But the company needs 75 per cent shareholder approval to do so.

HKM, which holds three board seats, has a big enough stake to block the expansion of the board if it wants to.